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The latest analyst coverage could presage a bad day for UP Global Sourcing Holdings plc (LON:UPGS), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. At UK£0.50, shares are up 8.7% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
Following the latest downgrade, the twin analysts covering UP Global Sourcing Holdings provided consensus estimates of UK£92m revenue in 2020, which would reflect a stressful 26% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing UK£127m of revenue in 2020. It looks like forecasts have become a fair bit less optimistic on UP Global Sourcing Holdings, given the sizeable cut to revenue estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 26%, a significant reduction from annual growth of 7.0% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 0.07% annually for the foreseeable future. So it's pretty clear that UP Global Sourcing Holdings' revenues are expected to shrink faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. Analysts also expect revenues to shrink faster than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of UP Global Sourcing Holdings going forwards.
Unfortunately, the earnings downgrade - if accurate - may also place pressure on UP Global Sourcing Holdings'mountain of debt, which could lead to some belt tightening for shareholders. See why we're concerned about UP Global Sourcing Holdings' balance sheet by visiting our risks dashboard for free on our platform here.
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